Moody's Investors Service said it has downgraded to A1 from Aa3 the underlying general obligation rating on Algonac Community Schools, Mich.
The outlook on the district is negative. Concurrently, Moody's assigns an A1 underlying and Aa2 enhanced rating to the district's $5.2 million 2015 refunding bonds (general obligation - unlimited tax).
The A1 underlying rating and negative outlook apply to $26.4 million of general obligation unlimited tax (GOULT) debt, post-sale.
The downgrade of the underlying rating to A1 reflects the district's deteriorating general fund reserves and cash position pressured primarily from annual declines in student enrollment. Also incorporated in the rating is the district's moderately sized tax base with average socioeconomic characteristics; limited revenue raising flexibility; and average debt burden with exposure to an underfunded cost-sharing pension plan.
The Aa2 enhanced rating is based on the credit enhancement provided by the state of Michigan's School Bond Qualification and Loan Program (SBQLP). The programmatic rating reflects sound program mechanics and the strength of the state's GO credit.
